Is Investing in Preferred Stock a Smart Strategy?

Jared Kizer provides insight into investing in preferred stock and our assessment of whether it makes sense as a part of an portfolio allocation.

In this episode of Buckingham Perspectives, Head of Investment Research Jared Kizer provides insight into investing in preferred stock and our assessment of whether it makes sense as a part of an portfolio allocation. He also tackles more specific considerations and the types of risk associated with preferred stock.

If you have any questions please feel free to drop us a note.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The time frame chosen because of the dates of available data. The inception of the AIEQ ETF was 2017. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. All investments involve risk, including loss of principal. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information.

Buckingham Connects Quarterly Webinar: December 2023

Our thought leaders provide an outlook for next year, discuss the potential impact of the presidential election and share planning strategies to consider in 2024 and beyond.

Our Quarterly Connects Webinar features Buckingham thought leaders’ perspectives on U.S. and global market performance, tax planning considerations, and other developments on the horizon that may have an impact on your financial plan.

During this recorded webinar, Chief Investment Officer Kevin Grogan, CFA, CFP®  reviewed why 2023 turned out to be a solid year for markets and whether the Federal Reserve may begin cutting rates next year. Chief Planning Officer Jeffrey Levine, CFP®, CPA, PFS, CWS, AIF, RICP, ChFC®, BFA shared the biggest legislative changes that will go into effect in 2024 and how advisors can help their clients plan for these changes. They also answered questions about the potential impact of the upcoming presidential election on financial plans, maximizing the bond side of portfolios now that interest rates are higher, and ways to prepare for future estate tax law changes.

Is it a Good Time to Invest in Commodities?

Jared Kizer explores the potential benefits and disadvantages when investing in commodities and how they can open your portfolio to more sectors including energy, industrial metals, precious metals, livestock and grains.

While investors may be familiar with direct ownership of commodities like gold and other precious metals, investing in them through financial markets offers a wider range of diversification for your portfolio. In this episode of Buckingham Perspectives, Head of Investment Research Jared Kizer explores the potential benefits and disadvantages when investing in commodities and how they can open your portfolio to more sectors including energy, industrial metals, precious metals, livestock and grains.

If you have any questions please feel free to drop us a note.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. The time frame chosen because of the dates of available data. The inception of the AIEQ ETF was 2017. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio nor do indices represent results of actual trading. Information from sources deemed reliable, but its accuracy cannot be guaranteed. Performance is historical and does not guarantee future results. All investments involve risk, including loss of principal. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this information.

2024 Planning Considerations and Strategies for Individual Taxpayers

They say hindsight is 20/20, but tax planning shouldn’t simply be based on what has worked in the past. Upcoming life changes and external factors such as tax policy developments also deserve attention and may offer money-saving opportunities. With that in mind, here are several of the most important tax-planning considerations and deadlines to remember as we move into 2024.

Key Dates and Deadlines
April 1, 2024 – Deadline to take your first required minimum distribution (RMD).The age at which one must begin taking RMDs depends on their birth year. SECURE Act 2.0, which passed on Dec. 22, 2022, pushed back the RMD starting age to 73 from 72, beginning Jan. 1, 2023. The starting age will increase again, to 75, in 2033.If you were born in 1950 or earlier, you will need to start taking RMDs as previously scheduled.If you were born between 1951 and 1959, you will need to start taking RMDs at age 73.If you were born in 1960 or later, you will need to start taking RMDs at age 75.
April 15, 2024 – Taxes are due (unless extended due to a local state holiday).First-quarter estimated tax payment is due using Form 1040-ES.Deadline for making IRA and HSA contributions that can count toward 2023.Deadline to file for an extension using Form 4868.
June 15, 2024 – Second-quarter estimated tax payment is due using Form 1040-ES.Sept. 15, 2024 – Third-quarter estimated tax payment is due using Form 1040-ES.
Oct. 15, 2024 – Last day to file your extended tax return.
Dec. 31, 2024 – Deadline to timely take RMDs.
Jan. 15, 2025 – Fourth-quarter estimated tax payment is due using Form 1040-ES.

IRS Inflation Adjustments
The IRS makes inflation adjustments annually, and the increases have two purposes:

  1. To prevent tax bracket creep for those whose income keeps pace with inflation.
  2. To limit government revenue increases resulting from inflation.

Since the 1980s, the adjustment amounts have stayed within relatively predictable ranges. However, as inflation soared between 2021 and 2022, the 2023 adjustments represented the sharpest increase in nearly four decades. Even so, many families still had less inflation-adjusted net income going into 2023. Fortunately, inflationary pressures are easing. For the 12-month period through September 2023, inflation increased 3.7%, reflecting a significant decline from 7.8% during the previous period. However, when it comes to inflation and taxes, many planning strategies remain unchanged as we head into 2024.

For a more detailed breakdown of these adjustments, download our 2024 Tax Guide.

Selection of IRS Inflation Adjustments

2024 Tax Planning Considerations
Standard Deduction
In 2017, the Tax Cuts and Jobs Act significantly increased the standard deduction amounts, making it unnecessary for many taxpayers to itemize. If this is the case for you, then strategically managing adjustable below-the-line deductions (charitable contributions, payments of state and local taxes, medical expenses, etc.) to maximize itemization may not be necessary. It also highlights the importance of effectively managing above-the-line deductions, which can be taken regardless of whether someone uses the standard deduction or itemizes. These include deductions for items such as a traditional IRA or HSA contributions, student loan interest and self-employed retirement contributions, among others.

Tax Brackets
It’s important to review whether the new tax brackets will give you enough room to remain in the bracket you were in for 2023 or whether adjustments should be made. By reviewing this early in the year, you can determine whether additional tax-reduction strategies could further reduce income so that you remain in the same bracket.

Long-Term Capital Gains Brackets
Long-term capital gains on investments receive advantageous tax treatment that you may benefit from. Proper planning can reveal opportunities and help prevent the following undesirable consequences:

  • Unless necessary, hold appreciated investment assets for at least a year before selling. Doing so earlier will result in them being taxed at ordinary income rates, which are higher than capital gains rates.
  • Consider whether you may be subject to an additional net investment income tax (NIIT) of 3.8%. This tax impacts investment income for single filers with modified adjusted income (MAGI) exceeding $200,000, and joint filers with MAGI exceeding $250,000. If this is a possibility for you, your advisor and tax professional can help review the consequences in more depth.
  • Account for asset location in your overall investment asset tax planning. If you have investment accounts with different types of tax treatment (e.g., taxable, tax-deferred and tax-free), strategically placing certain investments in certain accounts can help you significantly reduce the long-term impact of taxes on your portfolio.

Tax-Advantaged Accounts
It’s important to maximize available tax-advantaged options, such as retirement accounts and HSA plans. As previously mentioned, contributions to many of these accounts are eligible for an above-the-line deduction that taxpayers can take whether they itemize or not. Not only do they help save on tax payments today, but they also provide ongoing tax benefits in the form of tax deferral. Planning early can allow you to spread those contributions out over the year as opposed to potential last-minute large sums to help reduce taxes.

It is also advantageous to take a long-term view of tax deferral. It can be tempting to defer as much as possible to lower taxes today. But doing so could have adverse effects on tax payments in the future. The tax consequences for when the money is distributed should be considered. The decision to pay more taxes today could even come in the form of making non-deductible Roth IRA contributions (for those who qualify), or by converting tax-deferred accounts into a Roth IRA to allow for tax-free growth.

Other Inflation Adjustments
This article only outlines some of the key items that were adjusted for inflation. Depending on your situation, you may want to explore others, such as the foreign earned income exclusiongift tax exclusion or qualified adoption expenses. To ensure you are taking full advantage of the opportunities available, speak with your financial advisor to discuss which inflation adjustments would be most relevant to your circumstances as you begin tax planning for 2024.

For informational and educational purposes only and should not be construed as specific investment, accounting, legal, or tax advice. Certain information is based on third party data and may become outdated or otherwise superseded without notice. Third party information is deemed to be reliable, but its accuracy and completeness cannot be guaranteed. Individuals should speak with a qualified tax professional based on their own circumstances. Neither the Securities and Exchange Commission (SEC) nor any other federal or state agency have approved, determined the accuracy, or confirmed the adequacy of this article. R-23-6516